Match each of the following ratios with its formula. 1. Price-earnings ratio 2. Dividend yield 3. Book
Question:
1. Price-earnings ratio 2. Dividend yield 3. Book value per share 4. Plant assets to long-term liabilities a. Total liabilities + Total stockholders' equity b. Current assets = Current liabilities c. 365 + Accounts receivable turnover d. (Net income - Preferred dividends) + Average outstanding common shares e. (Stockholders' equity – Preferred rights) = Outstanding common shares f. 365 + Inventory turnover g. Dividends per share + Market price per share h. Net plant assets - Long-term liabilities i. Market price per share + Earnings per share j. Net income + Net sales k. Net sales + Average total assets I. Income before taxes and interest expense + Interest expense 5. Times interest eamed 6. Earnings per share 7. Net margin 8. Debt to equity ratio 9. Current ratio 10. Turnover of assets 11. Days to collect A/R 12. Number of days to sell inventory
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Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
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Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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